Skip-a-Pay: Free Cash Flow With A Summertime Break From Your Loan Payment

Date June 23, 2017

 alt= Q: Summer puts a strain on my budget because of extra expenses! Is there any way I can skip my car loan payment, just for one month, without being penalized?

A: Summer expenses can bust any budget. Skip-a-pay will give you more breathing room during this expensive time of year.

Skip-a-Pay is a program offered by MCCU allowing members to skip a monthly loan payment during an especially tight financial season for just a small fee. Many credit unions offer this program during the holiday season and again during the summertime. At MCCU, members are eligible to skip one payment a year. For a MCCU loan to qualify for skip-a-pay, it must be a consumer loan that was funded at least 6 months prior to the skip-a-pay request (credit cards not eligible).

For other lenders, Skip-a-pay may be available on most loans, though some allow it only for fixed, closed-end consumer loans, but not for credit cards, lines of credit or first mortgages. Most credit unions require you to be up to date on your loan payments, and for you to have sufficient funds in your checking account to cover the associated skip-a-pay fee.

Here are some important points to consider before you decide to skip a payment:

1.) Breathing room
During an expensive time of year, you might benefit by missing your car loan or personal loan payment. By skipping a large loan payment, you’ll free up some cash for your daily expenses so that you don’t finish the month in the red.

2.) Longer loan term
Skipping a payment means lengthening the life of your loan. You are essentially moving this month’s payment to the end of the loan.

3.) Accrued interest
While you won’t have to make your loan payment this month, you will be billed for interest on the skipped payment. You’ll need to pay that up at the end of the loan term.

Did You Know?

  • Many people fall out of the habit of making their monthly payments when they choose to skip just one payment. Remember: This is a one-month-only deal! Be sure to make your payments next month.
  • The popularity of skip-a-pay plunged at the turn of the millennium. It is now offered almost exclusively by credit unions, with very few banks still offering it.
  • If you feel like you could use skip-a-pay every month, you may be in financial trouble.

Want to hit the road without worrying about bills? Call, click or stop by MCCU today to learn about our skip-a-pay program.

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